Tech Drop Causes Stock Slide

11/29/2017 | 4:14 PM CST

(AP) -- A steep slide in big technology companies pulled the major U.S. stock indexes mostly lower Wednesday, offsetting strength in banks and health care and erasing some of the gains the market made a day earlier.

The tech-heavy Nasdaq composite, which is the best-performing index this year, had its biggest single-day drop since August as investors cashed in some of their winnings and bid up shares in health care companies and retailers, among others.

Bond yields rose following a strong report on third-quarter economic growth in the U.S. That helped banks because they can charge higher interest rates on loans.

The Dow Jones industrial average closed modestly higher, notching a record high for the second straight day, while the Standard & Poor's 500 index dipped less than 1 point.

"The market is flat, but inside the market, lots of change," said Bob Doll, chief equity strategist at Nuveen Asset Management. "People are rotating away from what's worked so well and buying some of the laggards."

The S&P 500 index fell 0.97 points, or 0.04 percent, to 2,626.07. The Dow gained 103.97 points, or 0.4 percent, to 23,940.68. The Nasdaq lost 87.97 points, or 1.3 percent, to 6,824.39. The Russell 2000 index of smaller-company stocks picked up 5.86 points, or 0.4 percent, to 1,542.30. Rising stocks slightly outpaced declining ones on the New York Stock Exchange.

Signs of a tech sell-off were visible early on Wednesday, as the Nasdaq opened lower.

Amazon, Facebook, Google parent Alphabet and other big technology companies gave up some of their recent gains as the sector posted its biggest loss in more than five months. Even so, the sector remains the biggest riser this year, with a gain of 35.7 percent.

"If you look at any kind of chart you can see how extended tech was," Doll said. "People are saying, 'I've made so much money, let me take a little money off the table.'"

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Shares in several chipmakers also slumped. Micron Technology lost $4.19, or 8.7 percent, to $43.74, while Applied Materials shed $4.42, or 7.7 percent, to $52.91. Lam Research declined $18.50, or 8.7 percent, to $194.64.

The market got another batch of encouraging economic news Wednesday.

The Commerce Department estimated that the U.S. economy grew at an annual pace of 3.3 percent from July through September. That would be the fastest rate in three years.

The new estimate helped lift bond yields. The yield on the 10-year Treasury rose to 2.38 percent from 2.34 percent late Tuesday.

Meanwhile, the National Association of Realtors said that its pending home sales index surged 3.5 percent last month. On Monday, the Commerce Department said sales of new homes jumped in October to their fastest pace in a decade.

Banks and other financial stocks posted solid gains for the second day in a row, getting a boost from rising bond yields. Banks benefit from rising bond yields because they can charge higher interest rates on loans. Citizens Financial Group climbed $1.89, or 4.9 percent, to $40.67.

Health care stocks also posted solid gains. UnitedHealth Group was the biggest riser in the Dow and accounted for almost half of the average's gain. The stock rose $6.74, or 3.1 percent, to $222.88.

Autodesk was the biggest decliner in the S&P 500, tumbling 15.9 percent.

The design software company slumped after saying it would eliminate 1,150 jobs, or about 13 percent of its current workforce. Autodesk said the cuts will cost $135 million to $149 million. The company had a disappointing third quarter and gave a weak forecast. The stock fell $20.61 to $109.34.

Investors welcomed news that Chipotle Mexican Grill is looking for a new CEO.

The restaurant chain is trying to recover from a sales slump following a series of food safety scares. Founder Steve Ells, who currently serves as chairman and CEO, will transition to executive chairman once someone new is in place at the top post. The stock gained $16.13, or 5.6 percent, to $301.99.

Crude oil prices extended their recent losses. Benchmark U.S. crude gave up 69 cents, or 1.2 percent, to settle at $57.30 a barrel on the New York Mercantile Exchange. Brent crude, used to price international oils, lost 50 cents, or 0.8 percent, to close at $63.11 a barrel in London.

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